Virgin Atlantic has "reluctantly" called off a landing fees strike after claiming that BAA had threatened to impound aircraft if it continued to withhold payments.

The airline admitted that thousands of its passengers could be stranded for the second time in two months if it continued with a ploy that could have seen its aircraft impounded for non-payment of fees. Last month Virgin Atlantic said it would not pay landing and parking charges to BAA in protest over the airport group's handling of the four-day snow disruption in the run-up to Christmas.

The carrier said BAA, Heathrow's owner, had threatened to take "whatever steps it deems appropriate" to reclaim the fees. "With this in mind, the airline is not prepared to jeopardise thousands of customers' travel plans in the event that BAA takes action that could ultimately impact on its flying programme," said Virgin Atlantic. A BAA source denied that the carrier had been threatened with confiscation of its jets, but acknowledged that the group would have been legally entitled to impound planes – as happens with bankrupt airlines. "Their lawyers would have been well aware of the sanctions that we had at our disposal," said the source.

However, the abandonment of the fees strike is unlikely to dampen demands for compensation from Heathrow airlines. BMI, the airport's second largest carrier, is seeking compensation alongside its parent, Germany's Lufthansa. The snow chaos coast BAA £24m – half the impact on British Airways, its biggest customer.

Announcing the fees strike last month, Virgin Atlantic said that keeping the fees in an escrow account would remind BAA of its responsibility to passengers and ensure that a BAA inquiry into the snow response is as independent as possible.

A BAA spokesman said: "Virgin Atlantic is an important customer and we are pleased to be working on a normal basis. Passengers undoubtedly benefit when airlines and airport operators work collaboratively."